Skil Corporation
Introduction:
Emerson Electric Company produced a broad range of consumer and industrial products such as electric motors, controls, drives etc. It had a strategy of producing low cost and high quality products. It had embarked on a program of acquisitions to meets its aggressive goals of growing sales 15% annually. It had acquired only financially successful companies. But in 1979, it acquired Skil Corporation, a financially mediocre performing company for $58 million.
Skil was a leading manufacturer of portable power tools serving the professional and consumer markets, the circular saw being the strongest and best seller amongst those tools, which it also invented, and was amongst the top three in power tools market share holdings in U.S. Other power tools that Skil manufactured included mid-priced drills and roto hammers. Skil manufactured multiple different models for different countries, depending upon the local needs of the market. Under increasing competitive pressure, Skil’s financial results had not been stellar, although reported profitability had improved in recent years. It sold through all distribution channels but was well established in hardware stores and had a strong position in circular saws in contractor supply channels. Its sales force serviced all distributors except the mass merchandisers. Skil seldom advertised and relied more on product publicity. It sold tools on a worldwide basis, with its greatest international strength in Europe.
Emerson has a task at hand to improve the market share of Skil Corporation given that the industry is saturated and has competitors like Black and Decker and Sears. We analyze this case by first looking into the portable tools industry and Skil’s competitive positioning followed by the strategic options available to Skil.
Industry Analysis of Portable Power Tool Industry:
The power tool industry consisted of Stationary tools and Portable tools powered by electricity, gasoline or air. The principal
Emerson Electric Company produced a broad range of consumer and industrial products such as electric motors, controls, drives etc. It had a strategy of producing low cost and high quality products. It had embarked on a program of acquisitions to meets its aggressive goals of growing sales 15% annually. It had acquired only financially successful companies. But in 1979, it acquired Skil Corporation, a financially mediocre performing company for $58 million.
Skil was a leading manufacturer of portable power tools serving the professional and consumer markets, the circular saw being the strongest and best seller amongst those tools, which it also invented, and was amongst the top three in power tools market share holdings in U.S. Other power tools that Skil manufactured included mid-priced drills and roto hammers. Skil manufactured multiple different models for different countries, depending upon the local needs of the market. Under increasing competitive pressure, Skil’s financial results had not been stellar, although reported profitability had improved in recent years. It sold through all distribution channels but was well established in hardware stores and had a strong position in circular saws in contractor supply channels. Its sales force serviced all distributors except the mass merchandisers. Skil seldom advertised and relied more on product publicity. It sold tools on a worldwide basis, with its greatest international strength in Europe.
Emerson has a task at hand to improve the market share of Skil Corporation given that the industry is saturated and has competitors like Black and Decker and Sears. We analyze this case by first looking into the portable tools industry and Skil’s competitive positioning followed by the strategic options available to Skil.
Industry Analysis of Portable Power Tool Industry:
The power tool industry consisted of Stationary tools and Portable tools powered by electricity, gasoline or air. The principal